A U.S. judge has thrown out the criminal convictions of Kenneth Lay, the late founder of Enron.

In a ruling released Tuesday, U.S. District Court Judge Sim Lake ruled that because Lay died before he could appeal his case, the convictions must be vacated. As far as the U.S. legal system is concerned, it's as if he was never even indicted. 

Enron founder Kenneth Lay leaves the courthouse after being found guilty of all counts in his fraud and conspiracy trials on May 25 in Houston.
(Pat Sullivan/Associated Press)

The ruling was based on a 2004 decision from a U.S. appeals court that affirmed two years ago that "the state should not label one as guilty until he has exhausted his opportunity to appeal."

Lay was convicted of fraud and conspiracy in May for his role in the multibillion-dollar collapse of Houston-based Enron, a firm that specialized in energy trading. He was scheduled to be sentenced this month, but died of heart disease in July.

Lay's lawyers immediately asked the courts to vacate the convictions under what's called the "doctrine of abatement."

The decision to erase the 10 criminal convictions will make it much more difficult for the U.S. government, the U.S. Securities and Exchange Commission and other civil plaintiffs to go after what's left of Lay's estate.

They are trying to recoup some of the billions lost by investors when Enron's stock value evaporated along with the enfolding scandal.

Lay's co-defendant, former Enron chief executive officer Jeffrey Skilling, will be sentenced Monday on 19 fraud and conspiracy charges.